The collapse of the US–China trade relationship is no longer a distant threat—it’s unfolding in real time. After Trump’s enforcement of a 100% tariff ultimatum, China retaliated with an 84% levy on US goods. The result: bilateral trade flows are grinding to a halt. US exports are dead on arrival, and Chinese imports have become too costly for American households. Meanwhile, Washington doubled down with a 125% tariff on key products, making clear this is no longer brinkmanship—it’s economic warfare.
But the fallout goes far beyond tariffs. Global supply chains are fraying under the pressure. The US, once dependent on $150 billion worth of Chinese goods, is scrambling for alternatives in Vietnam, India, and beyond—where prices are often up to 40% higher. Consumers are already feeling it. Inflation is rearing its head again, especially for the middle class and working poor, with annual household costs projected to rise by as much as 5%.
And in the background, the bond market is cracking. Yields on 10- and 30-year Treasuries are spiking—an anomaly during economic uncertainty. Analysts blame margin calls, structural inflation fears, and whispers of a coming bond exodus. If China liquidates even a fraction of its Treasury holdings, the shockwaves could jolt the global financial system. The strategy to pressure China may have triggered a crisis that no one can contain.
In trying to weaponize the consumer market and coerce a strategic rival, the US may have cornered itself. Because when the world’s two largest economies start burning bridges, it’s not just trade that collapses—it’s the architecture of globalization itself.
